Detroit Had a Corruption Scandal in 1930s That Was Bigger Than Today's

Ex-Mayor Richard Reading

February 21st, 2013, 10:45 PM

By DAVID ASHENFELTER

The federal investigation that has produced public corruption convictions against more than two dozen Detroit officials, contractors and others is big — very big.

But contrary to what you may have heard or read, the ongoing probe that could send former Mayor Kwame Kilpatrick to prison for racketeering, extortion and bribery pales compared to a Detroit corruption probe that began in the late 1930s.

That investigation, which became known as “the Janet McDonald affair,” involved extorting payoffs from houses of prostitution, gamblers, slot machine operators and other underworld types. It produced criminal charges and convictions against more than 150 people, including an ex-mayor, a county prosecutor and sheriff, city council members, the superintendent of police and scores of Detroit cops.

“In almost every decade you can find evidence of corruption in Detroit,” says Thomas Klug, a history professor at Marygrove College and director of the Institute of Detroit Studies. “But this is a case that disappeared down the rabbit hole.”

He said the case is so old, few Detroiters even are even aware of it. So, many residents incorrectly assume that the corruption case involving the administration of Kwame Kilpatrick is the largest in city history.

Klug said people also tend to forget corruption flourished when city hall was overwhelmingly white, as it was until the 1970s.

Kilpatrick, 42, his father, Bernard Kilpatrick, 71, and Detroit demolition contractor Bobby Ferguson, 44, are accused of shaking down city contractors and vendors.

In closing arguments last week, prosecutors said Kilpatrick used his position as mayor to steer $83 million in city contracts to Ferguson, who sometimes performed little if any work and beat out lower bidders. Authorities said Ferguson shared some of the proceeds with Kilpatrick who, with his father, allegedly extorted money from vendors who wanted to get or keep city contracts.

Lawyers for Kilpatrick and the others denied the charges, saying the men are honest, hard-working and the victims of weak evidence and government witnesses who lied to protect their own skins.

A 12-member jury is deliberating the fate of the three men. Racketeering and extortion carry a maximum penalty of 20 years in prison.

To date, federal prosecutors have obtained convictions against 25 Kilpatrick appointees, contractors, consultants and one former City Council member — Monica Conyers, who was released from prison in January and is in home confinement after serving most of a 37-month sentence for taking bribes in exchange for her vote on a $1.2-billion city sludge disposal contract.

The tale about what likely was the biggest corruption case in Motor City history was laid out in a 1957 book —“The Michigan One-Man Grand Jury” —by Robert Scigliano.

U.S. District Judge Avern Cohn, a longtime jurist, history buff and former Detroit police commissioner, dug the book out of his library last week when a reporter asked him if the corruption case against Team Kilpatrick is the largest in city history.

Scigliano said the earlier case began in August 1939 when Janet McDonald killed herself and her daughter. He didn’t say what prompted the murder-suicide. But when authorities found letters describing gambling activities and police payoffs involving her ex-lover, investigators started asking questions.

When then-Wayne County Prosecutor Duncan McCrea put a halt to the bribery probe, insisting that he didn’t have enough staff to conduct the inquiry, a citizens’ group petitioned Wayne County Circuit Court, which appointed Judge Homer Ferguson right, to conduct a one-man grand jury investigation.

Unlike federal authorities, who took years to build the case against Kilpatrick, Inc., Ferguson made quick work of his investigation.

His two-year probe produced indictments and convictions against prosecutor McCrea, then-Wayne County Sheriff Thomas Wilcox, and former Detroit Mayor Richard Reading, who was sentenced to 4½-to-5 years in prison for conspiring with scores of Detroit cops to take bribes from Detroit’s underworld.

Scigliano said the three men received $400,000 in bribes.

“Ferguson somehow managed to conduct all three investigations at the same time,” Scigliano wrote. “In doing so, he amassed a staff which, at peak strength, amounted to about 50 employees. He maintained up to three places for handling grand jury business and he compiled over 40,000 pages of testimony.”

The other bribery investigations involved Wayne County and the City of Detroit. The Detroit council members were indicted for taking $25,000 in bribes in the awarding of an $8-million contract to construct a public hosing project, Scigliano wrote.

Ferguson became a household name in Michigan and served from 1943-55 in the U.S. Senate, where he achieved notoriety for heading up several investigations, including one into the Japanese attack on Pearl Harbor. He died in 1982 at age 94.

Like defendants in city-hall corruption trials today, the defendants in the 1940s could behave like self-lampooning narcissists.

After the verdict was announced, ex-Mayor Reading declared: “This is the greatest injustice since the crucifixion of Christ!”